Archive for May, 2011

Chriss W. Street

Dead Hand of Government Impoverishes the Middle Class

by Chriss W. Street

Michael Spence, Nobel Laureate and former Dean of the Stanford Business School, has just published a rigorous economic analysis called: “The Evolving Structure of the American Economy and the Employment Challenge.” The report illuminates how the unbridled growth of government consumption spending has destroyed America’s productivity leadership, driven entrepreneurs to off-shore production, and destroyed middle class wage rates.

Adam Smith, 18th Century English economist, pioneered the concept of the “invisible hand” to describe how capitalism through self-interest, competition, and supply and demand, more effectively allocated resources than the “dead hand” of the state; it levied punitive taxes, adopted restrictive regulations, and enforced monopolies to favor their crony allies. Smith described how English entrepreneurs flourished after their King’s feudal dominance of the economy was liberated by adopting the laissez-faire economics that allowed transactions between private parties to be free from the state’s coercion. Smith described how new wealth was rapidly created and compounded over time form the productivity gains of the Industrial Revolution that leveraged the value of workers and led to higher wages.

The Spence report illuminates that from 1988 to 2008, America’s productivity dominance collapsed by 70%; shrinking from 2.5% gain per year to only .7% per year. This crash in American leadership was the result of 98% of the 27.3 million new jobs created during the period coming from the lower productivity, and thus lower wage, “consumption” sector of the economy. Higher productivity, and thus higher wage, “goods-producing” sector grew by only 620,000 jobs. The root cause of this substitution for lower productivity jobs was a 23% growth in government, to 22.5 million workers, and a 63% growth in government dominated healthcare, to 16.3 million workers. Productivity for the American goods-producing sector continued to grow by a healthy 2.3% per year, but productivity of government workers sunk by 4% and productivity of healthcare workers plummeted by 9%.

In 1988 the average value added for American workers was $75,000. Over the last twenty years, America’s revolution in information-technologies helped drive up the valued added of a goods-producing American worker to $115,200 per year. But the productivity value of government and healthcare worker tumbled to $72,000 per worker; dragging down the average value added of American workers to only $90,750. That $24,450 loss of productivity explains allot about why the American middle class wages have been shrinking in the United States.

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Kurt Schlichter

Special Election: The Battle by the Beach

by Kurt Schlichter

Patrick “Kit” Bobko was willing to jump out of airplanes to earn his airborne wings as an Air Force Academy cadet, so the dying dinosaur that is the Los Angeles Times is not going to intimidate him.  Nor is the fact that California’s 36th Congressional District has a marked Democratic registration advantage.  On Tuesday May 17th, Kit will be facing a cast of over 15 competitors in an early test of California’s wacky new open primary law.  Refreshingly young, smart, and conservative, Kit Bobko might just foreshadow the new resurrection of California’s DOA Republican Party.

Congressional Candidate Kit Bobko

The 36th District covers the southern coast of Los Angeles County, anchored on the south by the hills of Rancho Palos Verdes where amazing rich people enjoy spectacular views of the Pacific from Malibu to Catalina Island.  It then heads north, ending in the bohemian nightmare that is Venice.  In between are Torrance and the beach cities of Manhattan Beach, Redondo Beach and Hermosa Beach, where Kit has twice been elected to the city council and has battled all manner of liberal nitwittery.  These are generally prosperous towns, getting wealthier the closer one goes toward the unrivaled beaches.  These people are natural Republicans but don’t seem to know it – educated, affluent, and entrepreneurial, they are the enemies of a liberal machine that still somehow get their votes.   Last year they famously reelected a liberal state senator over her GOP rival despite her clear disqualification from office – she tragically died during the campaign.

Up to the 90s, the voters would check the box for GOP candidates in state and federal elections, but for the last several terms they sent Democrat Jane Harman to Washington.  Harman easily won reelection in 2010, but Congress being no fun when the Democrats weren’t in a majority anymore, she quit earlier this year.  Harman didn’t need the aggravation – she was likely the richest member of Congress thanks to her recently deceased husband Sidney, who founded the Harmon-Kardon audio empire and recently bought Newsweek for $1, which was much more than it was worth.  Harman called herself a “blue dog” Democrat, which meant she pretended to be a fiscal conservative and hid the usual contempt for American security that her comrades typically display when she was home, and then went back east and voted so left that it would make a Bolshevik blush.

Kit may just have an edge because he does not have the capacity to be two-faced, a likely result of the training he received as an Air Force Academy graduate.

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The New Ledger

Obama’s Lack of Solutions on Gas Prices

by The New Ledger

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On today’s edition of Coffee and Markets, we’ll discuss what’s driving gas prices and other environmental issues with James Taylor of the Heartland Institute.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

James Taylor at Forbes
Bloomberg: Consumer Comfort Declines as Gas Prices Rise
WSJ: In Washington, Oil CEOs on the Hot Seat
Environment and Climate News
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Reason TV

Reason.tv: Calculate YOUR Share of Govt Spending on War, Entitlements, & More

by Reason TV

Federal spending will top $3.6 trillion this year, but what’s your share?

The Government Cost Calculator is a new online tool that can be found at MyGovCost.org. A project of the California-based Independent Institute, it allows you to plug in your age, income, and education level to generate a series of tables that show your share of both current and future federal spending across more than a dozen categories. You can break out your share of spending for defense, Medicare, Social Security, and other areas and calculate what you could be earning if you were able to keep the money and invest it at a 6 percent rate of return.

The idea behind the project is that the true cost of government is reflected not just in your tax bill, but in your opportunity cost, what you could be doing with those dollars if you didn’t have to hand them over to the government.

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Kyle Olson

Teacher Threatens to Kill Her Boss, Union Gets Her Six Figure Pay Day

by Kyle Olson

Earlier this year, Education Action Group released a chart documenting the 15 separate steps involved in firing a tenured teacher in the state of New Jersey. The process involves a months-long investigation followed by a trial which can last a year or more. All told, it takes between two and five years (and a pile of money) to terminate an ineffective teacher in the Garden State.

The destructive nature of teacher tenure is, of course, not confined to New Jersey. If it were, we could all rest easy knowing that Gov. Chris Christie is on the case. Unfortunately, teacher tenure is wreaking havoc all across the fruited plains.

Take this recent case from Michigan. According to the Jackson Citizen Patriot, “A former Stockbridge High School teacher accused of threatening to kill the principal signed a severance agreement that will cost Stockbridge Community Schools about $135,000.”

This particular teacher had been suspended for two weeks by the principal for showing an R-rated movie to her students without permission from parents or school administrators. Apparently, this caused the teacher to go crackers, because she then threatened to “off” herself and the school principal, the paper reports.

But tenure served as the teacher’s ace-in-the-hole. Despite all of the teacher’s transgressions, it was the school that ended writing a six-figure check as a result of the episode.

“The sooner you can resolve the issue, the better off you are,” an official said of the district’s decision.

Think the Michigan case is an aberration? Consider this recent example of tenure-gone-wild from the state of California.

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Dr. Susan Berry

Conservative Group Sues Connecticut Governor, the ‘Anti-Christie’

by Dr. Susan Berry

Several current and prior Connecticut Republican lawmakers have joined the Roger Sherman Liberty Center, a conservative think tank, in a lawsuit against Governor Dannel Malloy and Democratic state leaders. The suit challenges the constitutionality of the new budget, passed last week by Mr. Malloy and the Democrats, which includes the largest tax increase upon citizens in the history of the state, as well as an earned income tax credit for those who pay no taxes.

Mr. Malloy, who likes to refer to himself as the “anti-Christie,” urged his lawmakers to pass his budget, based on his philosophy of “shared sacrifice,” without the $2 billion in union concessions that he used to balance it, arguing that he and the state unions, who largely helped to elect him, would engage in “talks,” behind closed doors, to achieve the concessions. The lawsuit asserts that, according to Connecticut’s constitution, the state’s expenditures must match its revenues, a requirement that was violated when the budget was adopted with the $2 billion hole.

Once the budget passed, Governor Malloy said he was giving union leaders a deadline of Friday, May 6th to come up with a concession package, a date that came and went with no agreement. Talks between the governor and union leaders apparently continued through the weekend and Monday, but on Tuesday, Mr. Malloy announced that he will move on to “Plan B,” in which he begins more than 4,700 layoffs and cuts to various state services and programs. However, even with this announcement, both the governor and union leaders say they will continue to engage in “talks” to close the budget gap, a situation which suggests that “Plan B” is still not final. In fact, the secretiveness of the negotiations has been as much of a news item as the content of the talks, with union locals holding strictly verbal briefings on the concession meetings for union members, without distributing any paper handouts containing information.


Regarding the failure to reach an agreement, the State Employees Bargaining Agent Coalition (SEBAC) issued the following statement:

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Joel B. Pollak

Two Visions in 2012: ‘Social Compact’ vs. Constitution

by Joel B. Pollak

The field of candidates for the 2012 presidential election may not yet be set, but the themes are coming into focus, as are the messages that each side will use to appeal to American voters.

The key to Republican victory will be to contrast a positive, conservative vision of America’s future with Obama’s doubtful, radical vision, as reflected in his record.

Obama stands for what he calls a “social compact”–a vague socialist ideal, grafted onto the Constitution, in which individual freedom and self-government must bow to the (never realized) ideal of material equality or fairness.

Republicans, bolstered by the Tea Party, must stand for the liberty that our Founders enshrined in the Constitution, informed by the timeless values that nurture it and expressed through policies that advance growth and opportunity.

Gallup Presidential Approval Tracking Poll (5/11/2010)

In a moment, I’ll consider the best arguments each side will make. First, however, it’s important to consider five key background factors that will affect the race and the result.

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Jeff Dunetz

Energy From Shale Would Solve Our Energy Problems (If Obama Would Allow It)

by Jeff Dunetz

In a famous scene from the movie “The Graduate” the character played by Dustin Hoffman is trying to make his way through a party thrown in his honor to celebrate his college graduation. One of his parent’s friends pulls him aside to give him advice for the future, “Ben” he says, “I have one word for you, plastics!”


If the movie was produced today that one word might very well be two words, shale energy. Shale gas and could solve this country’s energy problems.  And what makes it even more valuable is that there is an ample supply of it in the United States (if our president would let us mine it).

Recent technology breakthroughs have made shale gas extraction cheap, and clean.

It had long been assumed that natural gas could only be extracted when, like oil, it had accumulated in underground reservoirs. But a far greater quantity of gas from organic residues is trapped in the rock itself, and the technology has now been developed to extract it by pumping in water mixed with salt and other chemicals at very high pressure. The advantages are enormous. Not only is it a remarkably cheap source of energy, but since most of the process takes place underground, its “environmental footprint” is minimal – far less than that of oil wells or open-cast coal mines, let alone those useless windfarms.

So miraculous is the potential of shale gas to change the world that several countries, led by the US and China, are already piling in to exploit it on a huge scale. And an admirable introduction to this energy revolution by Matt Ridley has just been published by the Global Warming Policy Foundation, available online under the title The Shale Gas Shock, with a delightful foreword by the world-famous physicist (and “climate sceptic”) Freeman Dyson.

Ridley lucidly explains how and why shale gas is transforming the world’s energy prospects, and reviews the various objections which have been raised to it by environmentalists, to whom it is anathema. They hate it to the point of hysteria because it offers the prospect of a cheap and abundant fossil-fuel that could keep industrial civilisation going for hundreds of years, and is also, according to their prejudices, environmentally friendly, because its CO2 emissions are much less than those of coal or oil.

There are also major supplies of shale gas in Europe and in Israel. Yet in both the EU and United States, environmentalists have the upper hand and are preventing shale oil exploration.

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Publius

Thursday Open Thread: Airlift Edition

by Publius

Today, in 1949, the Soviet Union lifted its blockade of Berlin.

Brett Healy

Barack Obama vs. Paul Ryan: House GOP Budget Plan

by Brett Healy

Congressman Paul Ryan’s (R-WI 01) point by point rebuttal of President Barack Obama’s criticisms of the House GOP’s Path to Prosperity budget plan.

Publius

Media Matters Typo of the Day

by Publius

The geniuses at Media Matters have come up with a new conspiracy theory: that James O’Keefe is secretly behind the revelation of communist indoctrination at two University of Missouri campuses.

Ned Resnikoff dons his tin-foil hat and tries to connect O’Keefe to the story by linking him with Phil Christofanelli, the student who published his first-hand account of the “Introduction to Labor Studies” course at BigGovernment.com on Monday.

But Resnikoff makes a crucial, and embarrassing, typographical error:

It’s unclear how the tapes made their way to Insurgent Visuals. But it is worth nothing that on at least one occasion Christofanelli has collaborated with Andrew Breitbart’s favorite smear artist, James O’Keefe.

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Capitol Confidential

Medicare Rationing Leads to Private Insurance Rationing

by Capitol Confidential

Conservatives looking to balance the federal budget know the importance of reining in the cost of Medicare. But how you reduce the cost of the program is almost as important as whether you reduce the cost. The implications are enormous and here is why.

Burke Balch, the Director of the Powell Center for Medical Ethics, has done extensive research into the intricate connection of policy provisions contained in the ObamaCare legislation that all lead America down the road to rationing. Balch sees three avenues to rationing, with the primary danger coming from the creation of the new Independent Payment Advisory Board (IPAB).

In the State of the Union speech, President Obama said of what people are allowed to spend on health care, “The health insurance law we passed last year will slow these rising costs.” And he called for “further reducing health care costs.”

As Balch notes, What Obama didn’t mention was how the Obama health care law will “slow . . . rising costs.” It will do so in large part by forcing doctors and other health care providers to limit care, through “quality and efficiency” standards imposed on them that will establish one uniform national standard of care for what treatment may – and may not – be offered patients. Beginning in 2015, these “quality and efficiency” standards will be drawn from recommendations of an 18-member Independent Payment Advisory Board that is directed to come up with ways to limit what private citizens choose to pay, using their own funds and private insurance, so that they cannot keep up with the rate of medical inflation.

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James Panero

Dog-killing Artist Gets Rich off your Money

by James Panero

Last month, a New York “community board” approved a $750,000 installation by artist Tom Otterness for a public library in lower Manhattan: lion sculptures, paid for by a private donor, in a public space. Now, a cry has gone round the neighborhood to reject the work.

Tom Otterness

You may not recognize his name, but if you’ve spent much time in New York you’ve probably seen Otterness’ cartoonish bronze men and animals. Largely thanks to public art funds–paid for with public revenue–he often places his sculptures near schools, playgrounds, parks and libraries.

His little guys can be seen throughout the 14th St. subway station at Eighth Ave., hiding in nooks and crannies. He has made pieces for Europe and Asia and even designed a float for the Thanksgiving Day Parade. With a seemingly inoffensive cast of characters, Otterness has proven irresistible to art world bureaucrats, who continue to give him commissions.

But now, Otterness is being exposed as a killer. In 1977, he made a film in which he “rescued” a dog from a shelter, tied it up and, as the animal wagged its tail, shot it dead. The movie, which Otterness called “Shot Dog Film,” repeatedly shows the brutal execution.

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Jeff Dunetz

New Poll Numbers Show Obama’s Post-Bin Laden Bump is Over

by Jeff Dunetz

Sorry Mr. President, the party is over. Less than two weeks after Osama Bin Laden was killed by a squad of hero Navy Seals, the bump in Obama’s ratings has disappeared, in fact the latest Rasmussen poll shows that some of his numbers are worse than before.

For example the chart below reflects the President’s approval index from the day the Bin Laden news was released though today.  Approval index represents the people who strongly approve of the President’s performance minus the people who strongly disapprove. So it is an indication of the people most passionate about President’s performance, these are the people who are most likely to work toward/against Re-election of the present POTUS.

Keep in mind, the Bin Laden news was released well after the May 2nd sample was taken and released. Rasmussen numbers reflect three days sampling ending with the day prior to the numbers being released so, for example for the May 4th numbers only one third of the sample was questioned after the Bin Laden death was reported.  It was not until May 6th that the entire sample had the possibility of being aware of the death of Bin Laden.

On May 2nd, the day Bin Laden was killed the President’s approval index was at a -12. From there it generally rose through May 7th, and started falling through today’s report which shows him back at a -12.

Overall approval and disapproval numbers show the same pattern.

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Christopher C. Horner

New Energy Boone-doggle and the Republicans’ Moment of Decision

by Christopher C. Horner

Consider these two dueling headlines in today’s ClimateWire and their sub-heads (subscription required), as helpful reminders of how absurd U.S. energy politics have become (and why no one points to Europe any more as our ‘green energy’ model).

More important, they bring a little more focus on what appears to be the Republicans’ moment of deciding who they are, and who they will be.

1. BUSINESS: Solar industry sees some economic clouds after Italy slashes subsidies

…Italy, which last year installed 14 percent of global new solar capacity, recently became the latest country to slash its solar subsidies, delivering another blow to the industry as falling solar panel prices and weak demand have led several manufacturers to downgrade their sales and profit forecasts for the year.

2. FINANCE: Bill Gates calls for more U.S. clean energy investment…

Yes, Gates in an ‘investor’ in these things that, according to the various industries’ own press releases, exist only by the grace of, and cannot survive without, wealth transfers and other favors from the government. Oh, on a related note, another erstwhile windmill promoter — because that seemed to be a good way to use the state to create more market share for his gas interests — has decided, upon the failure of said windmill schemes, that a Plan B is in order.

And on cue, while we’re worried about spending and subsidies and distorting markets in favor of things that can’t make it happen on their own, (and told that our political class, are too), 180 Members of Congress are trying to create a new energy subsidy, one that would divert a product used in numerous other applications critical to our economy.

Because these interventions have worked out so well in the past. Hmm. Maybe, the plan is such a brilliant idea that the economy just can’t see it. Er, four ethanol boondoggles — toss in state-dependent wind, solar and natural gas cars — are better than one. Or something.

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Robert Allen Bonelli

Individual Mandate: Be Careful What You Wish For

by Robert Allen Bonelli

Even if you agree that Congress should have the right to order a citizen to purchase health care insurance on the basis of the commerce clause of the U.S. Constitution, you need to consider how this will expand the powers of the federal government to mandate other actions that you, your children and future generations may have to comply with.  Consider a party in power that disagrees with your ideology and imposes mandates on you to take actions opposite of your beliefs.  Can you visualize how allowing this mandate to stand is simply an abdication of individual liberty?

As the 4th District Court of Appeals deliberates the issue as the next step in a journey that both sides agree will end up at the Supreme Court, we are reminded that part of the genius of our Constitution is in how it defined a government of enumerated powers.  Those powers, specifically granted to the government by the people, clearly subjugate the government to the people regardless of the political agenda of those in power at any point in time.  Previous interpretations of the commerce clause, and the general welfare clause, broadened the powers of the federal government but only to increase the reach of its power to tax.  While those interpretations are still discussed in some circles, the mandate for a citizen who chooses not to participate in commerce to purchase a service to benefit commerce is a significant increase in the power of the federal government.  It will reverse the balance of power in favor of the federal government, subjugating the people to the will of the particular party in power at any given time.

This slope is indeed a slippery one.  If a party comes to power and passes legislation to mandate citizens to pursue education and careers based on the overall benefit to the nation’s commerce, rather than individual choice, it will be able to have that legislation upheld based on the precedent this current mandate will establish.  It will be argued that if the nation needs engineers and chemists, citizens should be tested and those with aptitudes in those disciplines should be mandated to direct their lives accordingly.  The argument will be strengthened by suggesting that these citizens are going to pursue careers anyway and the nation’s commerce would be benefited by mandating the direction of their careers.  If citizens fail to comply, the government would impose financial penalties.

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Joel Griffith

Illinois to Release Illegal Aliens Convicted of Violent Crimes Rather than Deport

by Joel Griffith

Governor Pat Quinn quietly announced Illinois’ formal withdrawal from Secure Communities in a letter to the Department of Homeland Security.  This program, administered through Immigration and Customs Enforcement (ICE), is fully successful only when state prison systems cooperate with the ICE and the Department of Home land Security.  States can choose to participate by  enabling discovery of the residency status of convicts held in state prisons and alerting ICE of upcoming convict release dates.  According to ICE, this program targets the “worst of the worst”, ensuring that these offenders no longer remain in the United States following their release from prison.

According to the FBI, Illinois ranks near the top in violent crime—number 14 out of the fifty states.  Now instead of ensuring deportation of violent criminals, the governor is choosing to release them into Illinois communities.  Such a policy may also serve to attract more criminals to this state as the risk of deportation following a conviction in Illinois is now significantly reduced.

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The New Ledger

Is Jon Huntsman a Political Traitor?

by The New Ledger

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On today’s edition of Coffee and Markets, Brad Jackson is joined by Pejman Yousefzadeh and Elizabeth Blackney to discuss whether Jon Huntsman’s plotting to run for President against the man for whom he serves as Ambassador is dishonorable and disloyal.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Erick Erickson: Why I Will Not Support Jon Huntsman. Ever.
Responding to Erick Erickson’s broadside of Jon Huntsman
China post key to Jon Huntsman’s 2012 bid
Huntsman’s 2012 Buzz Caused Friction With Obama Team
Erick: Loyalty, Honor, and Faith. Virtues We Should Prioritize.

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Follow Pej on Twitter
Follow Elizabeth on Twitter

Kyle Olson

Stimulus Pays Off With Obama Teachers Union Endorsement

by Kyle Olson

Consider the following statement:

“The National Education Association’s decision on Friday to begin the formal process of endorsing President Barack Obama’s re-election campaign may be the most vivid demonstration to date of the political benefits of the stimulus package passed by the president.”

That statement came from a reporter at the very left-leaning Huffington Post. Even Arianna Huffington’s people recognize the stimulus package, which provided billions to America’s public schools, which in turn provided millions in dues to the national teachers unions, as “simple politics.”

So we have to ask ourselves: What did we get for the money?  Tens of thousands of teachers remain employed, the unions reaped tens of millions in dues, but what was the return on the investment for taxpayers and students.

The answer is very little. As we’ve seen over and over again, government education dollars are for the teachers and their unions, not the kids who are supposed to be learning.

In Feb. 2009, Vice President Biden back told Delaware union leaders they had all the tools – ie. more money – necessary to fix the system.  Using gun imagery before it was uncool, Biden told his audience:

“We’ve been given all the ammunition.  If we shoot and miss, if we squander the opportunity, tell me how long you think it’s going to take for another American president to go and ask for more dollars to correct the education system.”

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Publius

Postal Service Reports Billions in Losses

by Publius

From the Associated Press:

The Postal Service is continuing to hemorrhage money, reporting a loss Tuesday of more than $2 billion over the first three months of the year and warning it could be forced to default on federal payments.